SENATE BILL REPORT

SB 6822

BYSenators Bluechel, Gaspard, Amondson and Barr

Exempting small timber harvesters from business and occupation tax.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 5, 1990; February 6, 1990

Majority Report:     Do pass.

     Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Fleming, Gaspard, Hayner, Johnson, Lee, Newhouse, Saling, Smith, Williams.

Senate Staff:Terry Wilson (786-7715)

                February 27, 1990

House Committe on Revenue

AS PASSED SENATE, FEBRUARY 10, 1990

BACKGROUND:

Persons who harvest timber for sale or commercial or industrial use from their own land or from land of another under contract or for hire are subject to the business and occupation tax upon "extractors" at a rate of 0.484 percent of gross proceeds.  Persons who harvest 500,000 board feet or less in a calendar quarter or 1 million board feet or less in a year may be small woodlot owners or small for-hire loggers.  However, this same category may often include persons clearing land for commercial, industrial, or residential development purposes.  These persons are not primarily engaged in the business of growing or harvesting timber.

In order for persons in this latter group to satisfy their business and occupation tax obligation, they are frequently required to open an account with the Department of Revenue, obtain necessary Washington State business licenses, and apply for state and federal taxpayer identification numbers.  Often in these cases the expenses of registering with the department is greater than the amount of tax.  The costs of processing the return by the department can also be greater than the amount of tax collected.

SUMMARY:

Persons who fell, cut, or take timber for sale or for commercial or industrial use in amounts not exceeding 500,000 board feet in a calendar quarter and not exceeding 1 million board feet in a calendar year are exempt from the business and occupation tax.

Appropriation:  none

Revenue:   yes

Fiscal Note:    available

Senate Committee - Testified:   Nels Hanson, Washington Farm Forestry Association (pro)

HOUSE AMENDMENT:

The exemption is limited to those small harvesters of timber whose income from timber harvesting is less than $100,000 per tax year.